figure 16. performance in competitiveness indicatorsispepune.org.in/jispe308pdf/burang4.pdf ·...

478 JOURNAL OF INDIAN SCHOOL OF POLITICAL ECONOMY JULY-SEPT 2008

Figure 16. Performance in Competitiveness Indicators

4.1.13. Mukand Ltd.

Mukand Ltd. was originally incorporated as

Mukand Iron and Steel Works Ltd. in 1937, but

in 1939 it was taken over by Bajaj Group. In 1989,

it was renamed Mukand Ltd. and the registered

office setup in Mumbai. The company functions

through two steel plants at Kalwa near Mumbai

and Ginigera in Karnataka. The activities of the

company include manufacture of steel, machine

building, turn-key projects and highway

construction. The steel division produces alloy,

special and stainless steel long products in a

variety of grades and sections. Mukand Ltd. is

engaged in highway construction projects funded

by the World Bank and has signed a Joint Venture

Agreement with Vini Iron & Steel Udyog Ltd. for

captive mining of coal block in Jharkhand as per

the letter for allocation of coal block issued by

Government of India, Ministry of Coal. The joint

venture company will accomplish mining

operations and allocate the production from the

mineto Mukand Ltd. and Vini Iron & Steel Udyog

in the proportion of 58.81 per cent and 41.19 per

cent, respectively.

Table 21. Competitive Performance of Mukand Ltd.

Indicator Weighted Rank

Score

(1) (2) (3)

Productive Performance 6.93 5

Financial Performance 2.16 12

Cost Effectiveness 7.39 13

Sales and Marketing Strategy 1.75 12

Stock Market Performance 2.30 5

Consumer Satisfaction 0.50 7

Technology and Environment 1.61 11

Human Resource Development 2.03 5

Foreign Trade 2.94 12

Growth Variables and Potential 3.13 6

Overall Competitiveness 30.75 13

The firm, Mukand Ltd., is in the thirteenth

position, i.e., the second last in all the sample

firms, with a score of only 30.75. It has performed

reasonably well on the productive performance

index (fifth position) with 83 per cent capacity

utilisation and HRD index (fifth position) with

VOL. 20 NO. 3 THE PERFORMANCE OF INDIAN IRON AND STEEL INDUSTRY ... 479


decent expenditure on staff welfare and some

other such expenses and stock market index (fifth

position) (Table 21). Moreover, the firm has

reported the highest growth in profits in the last

three years which has secured it a sixth rank on

the growth index. However, in all the other eight

indicators of competitiveness, the firm has shown

disappointing performance. Special mention can

be made of its foreign trade performance, as it is

in twelfth rank there due to negative net foreign

exchange earned as well as minimal exports in the

total sales. Furthermore, the firm has little market

share and spends least on advertising, which has

resulted in low score on the sales and marketing

index of competitiveness.

4.1.14. Lloyds Steel Industries Ltd.

Lloyds Steel Industries Ltd., a flagship

company of the Lloyds Group was incorporated

in 1970 under the name Gupta Tubes & Pipes Pvt.

Ltd. It was renamed Lloyds Steel Industries Ltd.

in 1985. The firm is mainly engaged in the

manufacture and marketing of sponge iron, hot

rolled and cold rolled coils, galvanised sheets and

coils. It also undertakes designing and fabrication

of various chemicals, pharmaceutical and other

machinery coupled with manufacture of steel

pipes, tubes and steel castings. Presently the

company has three manufacturing units situated

in Maharashtra. Two units are located at Wardha,

manufacturing hot rolled, cold rolled, galvanised

plain and corrugated coils of steel. The third unit

located at Thane manufactures silos, steel pipes

and tubes and fabricates chemical and

pharmaceuticalmachinery. Since its inception the

company has entered into various technical

collaborations and tie-ups with national and

international engineering companies. However,

due to poor performance in all spheres, the

company has filed references with BIFR for four

consecutive years since 2001, for consideration

of its sickness.

Lloyds Steel Industries Ltd. show especially

dismal competitive performance having largest


the difference of score of 6.75 with the previous

firm, i.e., Mukand Ltd.. Mainly because of poor

performances at the stock exchange and all the

growth variables, the firm is in the last position

of the overall competitiveness index. It has also

displayed poor comparative performance in the

financial indicators (thirteenth rank) and

technological and environmental indicators

(thirteenth rank). It can be seen in table 22 that

the firm has scored zero in two of the indicator

indices (stock market performance and consumer

satisfaction), which is suggestive of minimum

scores among rivals in all the sub-indicators of

that particular indicator. As far as consumer

satisfaction index is concerned, the firm ranked

eighth there, despite zero score because some of

Table 22. Competitive Performance of

the other firms, up the order, are on same ranks.

Lloyds Steel Inds. Ltd.

Indicator Weighted Rank

Score

(1) (2) (3)

Productive Performance 4.98 9

Financial Performance 1.70 13

Cost Effectiveness 9.23 6

Sales and Marketing Strategy 1.95 9

Stock Market Performance 0.00 14

Consumer Satisfaction 0.00 8

Technology and Environment 1.27 13

Human Resource Development 0.29 9

Foreign Trade 3.59 8

Growth Variables and Potential 0.98 14

Overall Competitiveness 24.00 14


5. Financial and Non-Financial

Competitiveness of the Firms

The financial and non-financial performance

of a firm is complementary to each other, as either

cannot be sacrificed at the expense of the other.

However, in the short term, financial

performance may take more prominence in

determining the competitiveness of a firm,

whereas to sustain it in the long run, a firm must

pay enough attention to the non-financial aspects

of competitiveness. When we look at the financial

and non-financial indices separately, it is found

that the financial index has only 39.85 per cent of


the total weights of 100 whereas the non-financialindex has the remaining 60.15 per cent. Thisindicates more importance to the non-financialfactors given by the industry experts in the surveyof sample firms, as they interpret that it is thefactors such as productivity, technology, humanresource, sales and marketing strategies, etc., thatstrengthens their financial performance in thelonger run. The weighted average scores of theindicator indices are summed up into financialand non-financial indices for further analysis. Asalready mentioned, financial performance, costeffectiveness, stock market performance andforeign trade indicators comprise the financialindex whereas the non-financial indicatorsincorporate productive performance, sales andmarketing strategy, consumer satisfaction,technological issues, human resource and growthvariables.

The industry average for the financial index is19.08, whereas that of the non-financial index is

20.00 (table 23). It is marked that while nine firmsshow above industry average performance on thefinancial index, only seven of them are above thesame in the case of the non-financial index. Thissupports the observation that firms in the Indianiron and steel industry needs to perform better inthe non-financial indicators of competitiveness,in order to improve the industries performance asa whole. This is evident by the fact that mosthindering problems of the industry relate tonon-financial aspects, such as low labourproductivity, capacity underutilisation andenvironmental pollution issues. It may be notedthat the industry averages of both the indices arevery close. However, the actual performance ofthe firms in the non-financial index iscomparatively poorer as reflected by the lessernumber of firms showing above industry averageperformance. The high average score, despite ofinferior firm performance, is a result of relativelyhigher weights attached to the non-financialindicators of competitiveness.

Table 23. Scores and Ranks in Financial and Non-financial Indices

Overall CompetitivenessFirms Financial Index Non-Financial Index Index

Score Rank Score Rank Score Rank

(1) (2) (3) (4) (5) (6) (7)

Tata Steel Ltd. 24.90 1 30.26 2 55.16 1

Steel Authority of India Ltd. 19.45 7 30.83 1 50.28 2

J S W Steel Ltd. 23.05 2 24.70 3 47.76 3

Rashtriya Ispat Nigam Ltd. 20.82 5 24.34 4 45.15 4

Essar Steel Ltd. 18.54 10 21.32 6 39.86 5

Jindal Stainless Ltd. 19.89 6 18.98 8 38.87 6

Uttam Galva Steels Ltd. 21.44 4 16.16 10 37.60 7

Ispat Industries Ltd. 15.73 11 21.55 5 37.28 8

National Steel & Agro Inds. Ltd. 19.21 8 18.04 9 37.24 9

Bhushan Steel Ltd. 19.15 9 15.32 12 34.47 10

Shree Precoated Steels Ltd. 22.15 3 12.24 13 34.39 11

Bhushan Power & Steel Ltd. 13.45 14 20.77 7 34.23 12

Mukand Ltd. 14.79 12 15.96 11 30.75 13

Lloyds Steel Inds. Ltd. 14.52 13 9.48 14 24.00 14

Industry Average Score 19.08 -- 20.00 -- 39.07 --


Figure 19. Comparison of Financial and Non-financial Index

A general industry analysis shows that eight

firms namely Tata Steel Ltd., JSW Steel Ltd.,

Jindal Stainless Ltd., Uttam Galva Steels Ltd.,

Bhushan Steel Ltd., Shree Precoated Steels Ltd.,

National Steel & Agro Inds. Ltd., and Lloyds

Steel Inds. Ltd., have bettercompetitive positions

in the financial indicators of competitiveness

(figure 19). Further, only the remaining six firms

performbetter in non-financial indicators in terms

of ranks. However, in terms of scores, only six

firms show superior performance in the financial

indicators, while remaining other eight have

better non-financial scores. This once again

evidences the higher scores in the non financial

index on account the higher weights attached.

While examining firms’ competitive standing

in both the indices, the objective is to figure out

whether financial factors or non-financial factors

have a greater contribution to the overall

competitiveness. Furthermore, it will reflect the

specific areas on which a firm should focus, while

formulating targets and policies. Tata Steel stands

at the top in both the financial and the overall

indices, whereas in the second position on the

non-financial index. Its superiority is established

in all the spheres of competitiveness, although the

non-financial index contributes more (30.26

score) to its overall score. This is mainly because

of its superior performance in technological

issues, consumer satisfaction and sales and

marketing strategies. SAIL, the second firm in the

overall index shows comparatively mediocre

performance in the financial index, with seventh

rank (19.45 score) mainly because of the lowest

score for foreign trade index. However it has the

first rank on the non-financial index due to best

consumer satisfaction and superior human

resource development efforts.

The other firm which has striking differences

in financial and non-financial performances is

Uttam Galva Steels Ltd., which stands in the

fourth rank in terms of the former index, whereas

tenth in the latter index. The opposite is the case

with Ispat Industries Ltd., whose non-financial

performance (fifth rank) is much superior than the

financial performance (eleventh rank). Another

prominent observation is that in spite of below

average overall competitive position (eleventh


rank) of Shree Precoated Steels Ltd., it is on thethird rank in the financial index due to the highestscore in foreign trade measures and a good costperformance. In sharp contrast to this, is itsnon-financial performance at the thirteenth(11.83 score) rank despite the fact that it showsgreat growth potential in future. Remarkably,Bhushan Power & Steel Ltd. is on the last positionon the financial index, whereas it performssatisfactorily on the non-financial index. Thedifference of scores is also notable in its case asout of a 34.23 overall score, only 13.45 comesfrom the financial indicators, which lays stress onthe requirement of more attention on the financialfactors of competitiveness. All the other samplefirmshave obtained more or less similar ranks andclose scores in both the financial andnon-financial indices.

Therefore, since the competitiveness index isthe sum of the financial and the non-financialindices, with higher weights assigned to theindicators of non-financial index by the industryexperts, it may be concluded that the overallcompetitiveness of a firm is relatively moredependent on its non-financial performance.There are two contrasting examples of firms inour indices to substantiate this. Shree PrecoatedSteels Ltd. has excellent financial score with thirdrank, whereas its poor non-financial score withthirteenth rank has pulled it down to the eleventhrank on the overall competitiveness index.Counterpointing, SAIL stands second on theoverall competitiveness index even with seventhrank on the financial index, mainly due to itssuperior non-financial performance with the firstrank.

6. Conclusions

It might be concluded that the performance ofthe Indian iron and steel industry with respect tokey indicators such as production, consumption,foreign trade, prices, etc., has certainly improvedover the past years, especially after its

liberalisation. The growth in production andconsumption during the post-liberalisation periodof 1991-92 to 2006-07 was estimated to be at arate of 8.11 per cent and 6.26 per cent per annum.Furthermore, the trade performance of thisindustry is excellent especially in terms of exportswith 30.70 per cent growth during thepost-liberalisation,which wasnegativeduring thepre-liberalisation period (1975-76 to 1991-92).Therefore, the industry has positive prospects forthe future too. The capacity utilisation has alsoimproved to about 90 per cent in the last few years.However, employment is theonly indicator whichhas shown negative growth during thepost-liberalisation period indicating joblessgrowth in the industry.

The industry is then examined in terms ofincreased competition between its firms in thewake of its liberalisation. The study reflects therelative competitive positions of the 14 samplefirms for the year 2006-07, out of which,performance of five firms was above the industryaverage score of 39.07. After reviewing the firstfive positions of the firms in the competitivenessindex, it may be concluded that as the differenceof scores remain substantial between the firms,the competition is not that substantial at the toplevel, each firm having their own securedpositions. The only exception is the third andfourth positions, i.e., JSW Steel Ltd., (47.76score) and RINL (45.15 score) where thecompetition is tough. The firms which performexceptionally well are Tata Steel Ltd. and SAILmainly due to superior competitive performancein all the indicators except productivity andforeign trade. Below the industry average, UttamGalva, Ispat Industries and National Steel seemto be in close competition whereas Bhushan Steel,Shree Precoated and Bhushan Power competehard between themselves. Special mention needsto be made regarding the competitiveperformance of Mukand Steel and Lloyds SteelIndus. Ltd., which have performed poorly on theoverall as well as indicator indices. These firms


need to develop their technological base, improveforeign trade andmaintain growth in key financialindicators in order to sustain in the industry.

When the competitiveness index is dividedinto financial and non-financial indices, the mostimportant observation is the weighting pattern bythe experts in the Indian iron and steel industry.Visibly higher weights have been attached to thenon-financial sub-indicators of competitivenesssuch as productivity, consumer satisfaction,technological development, research anddevelopment, human resource, etc., as in the longrun they are considered most influential indetermining and sustaining the competitivenessof a firm. Looking at the financial andnon-financial index separately, it is seen that thecompetitive rankings differ somewhat as somefirms perform better in one than the other.Nonetheless, because of the higher weightsattached, the firms which showed betterperformance on the non-financial index, haveensured better positions on the overallcompetitiveness index.

NOTES

1. We have defined apparent consumption as productionminus export plus import. However, the data source, namely,joint plant committee (JPC) gives the apparent consumptiondata which is already adjusted for change in stocks and interplant transfers. The separate data for all these variables arenot published, therefore we have used definition of apparentconsumption as quoted in the paper. See Government of India(2006), Table 1.8 for further clarification.

2. Prowess is a firm level database which containsinformation on approximately 10000 large and medium sizeIndian firms. The database is maintained by a firm namedCentre for the Monitoring of the Indian Economy (CMIE). Inorder to be included in the database the firm needs to be eithera listed company or if it is a public limited company it needstosatisfy the condition (Income + Liabilities) / 2 = 200 MillionIndian Rupees. The firms in the database account for 75 percent of all corporate taxes collected by the Indian government,more than 95 per cent of excise duty and 60 per cent of allsavings of the Indian corporate sector. The firm level data inProwess is gathered from their annual accounts or reports andfrom other sources such as stock exchanges, Registrars ofCompanies associations, etc. The number of indicators per

company is close to two thousand and the information isusually available for ten years. Prowess also provides anormalisation of the firm level data across companies and overtime and updates the data everyday for its clients.

REFERENCES

Aldington Report, 1985; Report from The Select Committeeof The House of Lords on Overseas Trade, HMSO,London.

Altenburg, Tilman, Wolfgang Hillebrand and JörgMeyer-Stamer,1998;Building Systemic Competitiveness:Conceptand Case Studies from Mexico, Brazil, Paraguay,Korea and Thailand, Reports and Working Papers, No.3/1998, German Development Institute (GDI), Berlin.http://www.meyer-stamer.de/1998/sysco98.pdf

Boyce, J., 1986; Kinked Exponential Models for Growth RateEstimation, Oxford Bulletin of Economics and Statistics,Vol. 48, No. 4.

Buckley, Peter J., Christopher L. Pass, and Kate Prescott,1988; Measures of International Competitiveness: ACritical Survey, Journal of Marketing Management, Vol.4, No. 2.

Burange, L. G., 2000; Growth and Structure of Manufactureof Textile Products in India: An Analysis of Four MajorIndustrial States, Review of Development and Change,Vol. 1.

CMIE, 2007; PROWESS Database, Centre for MonitoringIndian Economy, Mumbai.

Datt, Ruddar andK. P. M.Sundharam, 1998; IndianEconomy,Chand & Company Ltd., New Delhi.

D’Costa, Anthony P., 2006; Economic Nationalism inMotion: Steel, Auto, and Software Industries in India,Paper presented at the XIV Congress of the InternationalEconomic History Association, Session No. 94 on‘Foreign Companies and Economic Nationalism in theDeveloping World after World War II’, University ofHelsinki, Helsinki.www.helsinki.fi/iehc2006/papers3/Dcosta.pdf

D’Cruz, J. and A. Rugman, 1992; New Concepts for CanadianCompetitiveness, Kodak, Canada.

Department of Trade and Industry, 1994; Competitiveness,White Paper, Cm 2563, London, HMSO.

Flanagan, Roger, Carol Jewell, Stefan Ericsson and PatrikHenricsson, 2004; Measuring ConstructionCompetitiveness in Selected Countries: Progress Report,Innovative Construction Research Centre (ICRC) ProjectReport, School of Construction Management &Engineering, The University of Reading, Reading.

Gelei, Andrea, 2003; Competitiveness: A Match betweenValue Drivers and Competencies in the HungarianAutomotive Supply Chain, Budapest University ofEconomic Sciences and Public Administration, Hungary.


Goldar, B. and Vijay Seth, 1989; Spatial Variation in the Rateof Industrial Growth in India, Economic and PoliticalWeekly, Vol. 24, No. 22.

Government of India, 2005a; Annual Report, Ministry ofSteel, Government of India, New Delhi.

Government of India, 2005b; National Steel Policy, Ministryof Steel, New Delhi.http://www.steel.gov.in/nspolicy2005.pdf

Government of India, 2006; Report of the Working Group onSteel Industry for the Eleventh Five-Year Plan(2007-2012), Ministry of Steel, New Delhi.

Government of India, 2007; The Policy Framework,Important Policy Measures, Ministry of Steel, UpdatedNovember 2007. Retrieved on 26-02-2008 fromhttp://steel.nic.in/policy.htm

Government of India, 2008a; Annual Report, Ministry ofSteel, Government of India, New Delhi.

Government of India, 2008b; Wholesale Price Index Data,Office of Economic Advisor, Ministry of Commerce andIndustry. Retrieved on 17-09-2008 fromhttp://eaindustry.nic.in/

Government of India, 2009; Annual Survey of Industries2005-06, Ministry of Statistics and ProgrammeImplementation, Central Statistical Organisation,Industrial Statistics Wing, Kolkata (Various Issues).

Joint Plant Committee (JPC), 2007; Annual Statistics:2002-03 to 2006-07, Kolkata, (Various Issues).

Joshi, Mansi, 2006; Indian Steel Industry, Sector Report,Global Equity Research- India, Karvy Stock BrokingLimited, Hyderabad.http://202.87.40.59/Broker%20Research/Karvy/161106-Steel%20Sector%20Report%20161106.pdf

Krugman, P., 1994; Competitiveness: A DangerousObsession, Foreign Affairs, No. 73.

Mazumder, S. Mitra and T. Ghoshal, 2003; Strategies forSustainable Turnaround of Indian Steel Industry, Journalof the Institution of Engineers, Vol. 84, No. 1.www.ieindia.org/publish/mm/1003/oct03mm2.pdf

Muthuraman, B., 2006; Steel Steals the Show, InauguralSpeechat InternationalTrade Fair held at Delhi,ManagingDirector, Tata Steel Limited, Jamshedpur.http://www.tatasteel.com/company/itf_06.asp

Porter, M.E., 2002;Building the Microeconomic Foundationsof Prosperity: Findings from the MicroeconomicCompetitiveness Index, in Michael E. Porter, Klaus

Schwab (eds.), The Global Competitiveness Report2002-2003, World Economic Forum, Oxford UniversityPress, New York.

Prahalad, C. K. and G. Hamel, 1990; The Core Competenceof the Corporation, Harvard Business Review, Vol. 68,No. 3, May-June.

Pushpangandan, K. and N. Shanta, 2009; The Dynamics ofCompetition: Understanding India’s ManufacturingSector, Oxford University Press, Mumbai.

Reiljan, Janno, Maria Hinrikus and Anneli Ivanov, 2000; KeyIssues in Defining and Analysing the Competitiveness ofa Country, Estonian Science Foundation Working PaperNo.1,Facultyof Economicsand BusinessAdministration,University of Tartu, Tartu.

SAIL, 2008; Statistics for Iron and Steel Industry in India,Steel Authority of India Limited, New Delhi, (VariousIssues).

Saisana, M. and S. Tarantola, 2002; State-of-the-art Reporton Current Methodologies and Practices for CompositeIndicator Development, Report prepared by the AppliedStatistics Group, EUR 20408 EN, Institute for theProtection and Security of the Citizen, JRC Ispra, Italy.http://www.nottingham.ac.uk/ttri/pdf/2004_7.pdf

Schumacher,Katja andJayant Sathaye,1998; India’s Iron andSteel Industry: Productivity, Energy Efficiency andCarbon Emissions, Energy Analysis Program,Environmental Energy Technologies Division, ReportNumber LBNL-41844, Ernest Orlando LawrenceBerkeley National Laboratory, Berkeley.

Sinner, Jim, 2002; Addressing Competitiveness Impacts ofClimate Change Policies, Report to the Ministry ofEconomic Development, Wellington, New Zealand.http://www.med.govt.nz/upload/20940/competitiveness.pdf

UNCTAD, 2002; Improving the Competitiveness of SMEsThrough Enhancing Productive Capacity, United NationsConference on Trade and Development,TD/B/COM.3/51, Trade and Development Board,Commission on Enterprise, Business Facilitation andDevelopment, Seventh Session, Geneva.http://www.unctad.org/en/docs/c3d51_en.pdf

World Steel Association, 2008; Steel Statistics, Belgium.Retrieved on 05-09-2008 fromhttp://www.worldsteel.org/?action=stats_search

Appendix Table 1: Summary of Results of Competitiveness Index for Indian Iron and Steel Industry

Firms Technology HumanProductive Financial Cost Sales and Stock Market Consumer and Resource Growth

Performance Performance Effectiveness Marketing Performance Satisfaction Environmental Development Foreign Trade Variable and Overall CompeIndex Index Index Strategy Index Index Index Index Index Index Potential Index titiveness

Score Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Rank

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23)

Bhushan Power & 10.26 1 3.06 11 6.10 14 1.70 13 0.72 9 1.01 6 2.56 7 2.15 4 3.58 9 3.09 7 34.23 12

Steel Ltd.

Bhushan Steel Ltd. 6.65 6 3.51 10 7.88 12 2.26 8 2.60 3 1.51 5 1.90 9 0.16 12 5.16 5 2.85 8 34.47 10

Essar Steel Ltd. 7.96 4 3.61 9 8.86 9 2.71 4 0.63 10 6.04 1 1.38 12 0.48 8 5.44 4 2.74 11 39.86 5

Ispat Industries Ltd. 8.90 3 1.55 14 8.37 10 2.54 7 2.25 6 3.02 4 3.05 6 0.61 7 3.55 10 3.43 5 37.28 8

J S W Steel Ltd. 6.34 8 5.68 4 9.88 4 2.57 5 2.59 4 5.53 2 3.91 3 1.76 6 4.90 6 4.59 3 47.76 3

Jindal Stainless Ltd. 4.70 10 4.11 7 9.16 7 2.56 6 1.15 8 5.53 2 3.13 5 0.26 10 5.47 3 2.79 10 38.87 6

Lloyds Steel Inds. 4.98 9 1.70 13 9.23 6 1.95 9 0.00 14 0.00 8 1.27 13 0.29 9 3.59 8 0.98 14 24.00 14

Ltd.

Mukand Ltd. 6.93 5 2.16 12 7.39 13 1.75 12 2.30 5 0.50 7 1.61 11 2.03 5 2.94 12 3.13 6 30.75 13

National Steel & 9.87 2 3.81 8 10.10 2 1.75 11 0.49 12 3.52 3 1.23 14 0.07 14 4.81 7 1.60 13 37.24 9

Agro Inds. Ltd.

Rashtriya Ispat 4.39 11 10.40 1 7.97 11 3.84 3 0.27 13 6.04 1 3.83 4 4.06 2 2.18 13 2.17 12 45.15 4

Nigam Ltd.

Shree Precoated 2.50 13 4.48 6 9.46 5 1.88 10 1.58 7 1.01 6 1.73 10 0.14 13 6.63 1 4.99 1 34.39 11

Steels Ltd.

Steel Authority of 2.31 14 7.48 2 8.90 8 5.13 2 3.06 2 6.04 1 5.07 2 7.50 1 0.00 14 4.77 4 50.28 2

India Ltd.

Tata Steel Ltd. 4.14 12 7.41 3 10.31 1 5.43 1 4.18 1 6.04 1 6.39 1 3.79 3 2.99 11 4.47 4 55.16 1

Uttam Galva Steels 6.36 7 4.83 5 9.99 3 1.59 14 0.55 11 3.02 4 2.13 8 0.23 11 6.08 2 2.83 9 37.60 7

Ltd.

Industry Average 6.16 4.56 8.83 2.69 1.60 3.49 2.80 1.68 4.09 3.17 39.07

N.B. Zero indicator scores is indicative of worst performance of the firm in all the sub-indicators of that particular indicator index.


Appendix Table 2. Performance of Key Indicators of the Industry

Years Production for Sale Apparent Consumption of Export Import Number ofof Non-Alloy Non-Alloy (Million Tonnes) (Million Tonnes) WorkersFinished Steel Finished Steel

(Million Tonnes) (Million Tonnes)

(1) (2) (3) (4) (5) (6)

1975-76 5.75 5.47 0.51 0.23 3358041976-77 6.80 5.64 1.41 0.25 3289171977-78 6.97 6.22 1.10 0.35 3347511978-79 7.65 7.91 0.52 0.78 3637511979-80 7.64 8.97 0.06 1.39 3754901980-81 7.90 8.86 0.05 1.01 3986001981-82 9.38 10.39 0.04 1.05 4062791982-83 9.13 9.93 0.07* 0.98* 4155491983-84 8.50 9.30 0.07* 0.98* 4250801984-85 8.78 9.33 0.15 0.70 4589171985-86 10.03 11.16 0.02 1.15 4174951986-87 10.54 11.34 0.03 0.83 4433111987-88 11.95 12.82 0.04 0.92 4377811988-89 13.36 14.03 0.12 0.78 4268591989-90 13.83 14.18 0.25 0.59 3211191990-91 13.53 13.71 0.33 0.51 3465731991-92 14.33 14.84 0.37 0.97 3116231992-93 15.20 15.00 0.74 1.08 3668541993-94 15.20 15.32 1.02 1.06 3496261994-95 17.82 18.66 0.87 1.70 3441611995-96 21.40 21.43 1.28 1.54 3833401996-97 22.72 22.12 1.92 1.56 3468891997-98 23.37 22.63 1.62 1.82 3519571998-99 23.82 23.15 1.77 1.13 3240071999-00 26.71 25.01 2.67 1.60 3310112000-01 29.70 26.87 2.66 1.42 2829102001-02 30.63 27.35 2.70 1.27 2676362002-03 35.41 28.90 4.50 1.45 2645352003-04 38.58 31.17 4.84 1.47 2684592004-05 41.32 34.39 4.38 2.08 2949742005-06 44.39 39.19 4.47 3.79 3230512006-07 50.20 44.33 4.89 4.39 --

CAGR 6.85 6.19 14.16 5.45 -1.01

Source: SAIL [2008], JPC [2007] and Government of India [2009]* Estimated by using average of preceding two years and succeeding two years.

Appendix Table 3. Iron and Steel Industry Sample Firms’ Websites Visited

Firm Websites

(1) (2)

1. Bhushan Power & Steel Ltd. www.bhushanltd.com/2. Bhushan Steel Ltd. www.bhushan-group.org/3. Essar Steel Ltd. www.essarsteel.com/4. Ispat Industries Ltd. www.ispatind.com/5. J S W Steel Ltd. www.jsw.in/6. Jindal Stainless Ltd. www.jindalstainless.com/7. Lloyds Steel Inds. Ltd. www.lloydsgroup.com/8. Mukand Ltd. www.mukand.com/9. National Steel & Agro Inds. Ltd. www.nsail.com/10. Rashtriya Ispat Nigam Ltd. www.vizagsteel.com/11. Shree Precoated Steels Ltd. www.spsl.com/12. Steel Authority of India Ltd. www.sail.co.in/13. Tata Steel Ltd. www.tatasteel.com/14. Uttam Galva Steels Ltd. www.uttamgalva.com/

Appendix Table 4. Indicators and Sub-indicators of Competitiveness for Indian Iron and Steel Industry

Indicators Sub-Indicators Units Source Definitions and Adjustments Impact

(1) (2) (3) (4) (5) (6)

1. Productive o Capacity Utilisation Percent PROWESS (Total Output/ Installed Capacity)*100 Positive

Performance

o Labour Productivity Ratio PROWESS Gross Sales/ Number of Employees Positive

2. Financial Liquidity Ratio:

Performance

o Current Ratio Times PROWESS Current Asset / Current Liabilities provision Positive

Where current asset = Receivables + Inventories + Cash and Bank

Balance + Marketable Securities - Marketable Security group

Receivable Loan group Companies Receivable Loan other

Companies Housing Loans Application Money

o Quick Ratio Times PROWESS Quick Asset / Current Liabilities provision Positive

Where quick asset = Cash and Bank Balance + Sundry Debtors +

Marketable Securities Marketable Security group Application

Money Debtors exceeding 6 months

o Debt-Equity Ratio Times PROWESS Total Borrowings / Net Worth Negative

o Interest Coverage Ratio Times PROWESS PBIT (NNRT) / (Expenditure on Interest + Lease Rent + Positive

Expenditure on Other Financial Charges)

Turnover Ratios:

o Finished Goods Turnover Ratio Times PROWESS Cost of Goods Sold / Average Finished Goods Inventory Positive

o Net Working Capital Cycle Days PROWESS Gross Working Capital Cycle (Average Days Raw Material + Negative

Average Days Finished Goods + Average Days wip Stock + Average

Days Debtors ) Average Days Creditors

o Debtors Turnover Ratio Times PROWESS Total Credit Sales / Average Accounts Receivable Positive

Profit Ratios:

o Net Profit Margin Ratio Percent PROWESS (PAT Net of PE&OI / Net Sales)*100 Positive

o Profit Margin Over Total Income Percent PROWESS (PAT Net of P&E/Total Income Net of P&E)*100 Positive

o Return on Assets Ratio Percent PROWESS (PAT (NNRT) / Average Total Assets)*100 Positive

o Return on Net Worth Percent PROWESS (PAT (NNRT) / Average Net Worth)*100 Positive

o Return on Capital Employed Percent PROWESS (PAT (NNRT) / Average Capital Employed)*100 Positive

(Contd.)

Appendix Table 4. (Contd.)


(1) (2) (3) (4) (5) (6)

Other Financial Indicators:

o Net Worth Rs. PROWESS Equity Capital + Preference Capital + Reserves and Surplus Positive

Revaluation Reserve Misc Expense not written off

o Asset Utilisation Ratio Ratio PROWESS Total Income / Average Total Assets Positive

3. Cost Effectiveness o Raw Materials, Stores etc. Percent PROWESS Percentage of Total Cost Negative

o Indirect Taxes, Rents etc. Percent PROWESS Percentage of Total Cost Negative

o Other Miscellaneous Expenditure Percent PROWESS Percentage of Total Cost Negative

o Financial Charges Percent PROWESS Percentage of Total Cost Negative

o Prior Period & Extra-ordinary Percent PROWESS Percentage of Total Cost Negative

Expenses

4. Sales and o Market Share Percent PROWESS (Sales/ Total Sales of the Industry)*100 Positive

Marketing Strategy

o Expenditure on Marketing Percent PROWESS Cost compared to Sales Positive

o Expenditure on Advertising Percent PROWESS Cost compared to Sales Positive

o Expenditure on Distribution Percent PROWESS Cost compared to Sales Positive

o Number of Dealers Numbers Primary Positive

5. Stock Market o Earnings Per Share Rs. PROWESS PAT (NNRT ) in the most recent 12 month period/ Number of Shares Positive

Performance Outstanding as on that date

o Price- Earnings Ratio Times PROWESS Closing Price / EPS Positive

o Yield Percent PROWESS ((Dividend Rate*Face value)/ Closing Price)*100 Positive

6. Consumer o Customer Satisfaction Studies Yes/No Primary Positive

Satisfaction

o Techniques for Measuring Primary Positive

Customer Satisfaction

o Award for Customer Satisfaction Yes/No Primary Positive

(Contd.)



(1) (2) (3) (4) (5) (6)

7. Technology and Technology Acquisition:

Environmental

Indicators

o Technology Strategy: Import or Scale Primary Positive

In-House Development

o Foreign Exchange Spending on Rs. PROWESS Expenditure /Gross Sales Positive

Capital Goods

o Foreign Exchange Spending on Rs. PROWESS Expenditure /Gross Sales Positive

Royalty/ Know How

o Royalty, Know How Expenses Percent PROWESS Cost compared to Sales Positive

o R & D Expenditure Rs. PROWESS Expenditure /Gross Sales Positive

Technology Management:

o Power and Fuel Expenses Percent PROWESS Cost compared to Sales Negative

o Number of Production Plants Numbers PROWESS Positive

o Product Differentiation Numbers Primary Positive

Environmental Indicators:

o Pollution Control and Solid Waste Yes/No Primary Positive

Management

o Energy Conservation Yes/No Primary Positive

o Environmental Plantation Yes/No Primary Positive

o Environmental Recognitions Yes/No Primary Positive

o CSR Yes/No Primary Positive

o Certification to Plants Yes/No Primary Positive

(Contd.)

Appendix Table 4. (Concld.)


(1) (2) (3) (4) (5) (6)

8. Human Resource o Employment Generation Numbers PROWESS Number of Employees Positive

Development and

Social Indicatorso Salaries and Wages Rs. PROWESS Expenditure /Gross Sales Positiveo Other Expenses on Employees Rs. PROWESS Expenditure /Gross Sales Positive

o Provident Fund Contribution Rs. PROWESS Expenditure /Gross Sales Positiveo Staff Welfare Rs. PROWESS Expenditure /Gross Sales Positiveo Staff Training Rs. PROWESS Expenditure /Gross Sales Positiveo Certification to Plants (Health And Yes/No Primary Positive

Safety)o Loss Due to Labour Unrest Yes/No Primary Negative

9. Foreign Trade o Net Foreign Exchange Earned Rs. PROWESS Total FOREX Earning- Total FOREX Spending Positive

Measureo Export / Sales Percent PROWESS (Total Export / Sales)*100 Positive

10. Growth CAGR over 3 years:

Performance

and Potentialo Sales Percent PROWESS Positiveo PAT Percent PROWESS Positiveo Investment Percent PROWESS Positive

o Total Assets Percent PROWESS Positiveo Net Worth Percent PROWESS PositiveFuture Plans:o Firm’s Investment Plans over the Scale Primary Positive

Next 2 Yearso Plans to Produce any New Types Yes/No Primary Positive

of Steel in Next 2 YearsContingency Planning:

o Insurance Premium Expenses Percent PROWESS Cost compared to Sales Positiveo Repairs and Maintenance Expense Percent PROWESS Cost compared to Sales Positiveo Department for Disaster Yes/No Primary Positive

Management

Appendix Table 5. Basic Dataset of Sub-indicators of Competitiveness for 2006-07

Productive Performance Financial Performance

Firms Capacity Labour Quick Current Debt-Equ Interest Net Finished Debtors Profit Return on Return on Net Profit Return on Asset Util NetUtilisation Productivity Ratio* Ratio* ity Ratio* Coverage Working Goods Turnover Margin Capital E Net Margin Assets isation Worth*

Ratio* Capital Turnover Ratio* Over mployed* Worth* Ratio* Ratio* Ratio*Cycle* Ratio* Total

Income*Percent Ratio Times Times Times Times Days Times Times Percent Percent Percent Percent Percent Ratio Rs.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17)

Bhushan Power 90.84 3.02 0.77 1.21 3.21 2.31 38.35 6.02 6.62 5.88 7.40 24.00 6.52 5.02 0.89 811.93

& Steel Ltd.

Bhushan Steel 80.10 2.10 0.89 1.80 2.26 2.41 52.14 7.56 8.45 5.55 8.25 22.58 6.08 5.99 1.09 944.92

Ltd.

Essar Steel Ltd. 70.06 3.00 0.44 1.09 2.00 2.41 36.23 11.94 13.89 6.94 7.37 24.77 7.60 4.93 0.67 3408.09

Ispat Industries 83.48 2.81 0.66 1.18 3.98 1.76 -9.60 9.01 9.47 -4.10 -2.63 -9.36 -4.70 -1.81 0.61 2606.41

Ltd.

J S W Steel Ltd. 71.51 2.33 0.50 1.02 1.02 4.97 -37.17 23.16 27.88 12.00 13.38 27.44 13.22 9.38 0.81 4366.66

Jindal Stainless 67.50 1.88 0.51 1.15 1.93 5.73 -2.61 10.88 11.96 6.18 10.90 28.33 6.81 6.57 1.04 1067.92

Ltd.

Lloyds Steel 69.31 1.91 0.18 0.43 0.00 -0.13 -36.47 14.45 14.67 -2.73 -7.59 0.00 -3.20 -2.86 1.00 -400.12

Inds. Ltd.

Mukand Ltd. 82.83 2.09 1.28 2.38 2.71 1.30 85.58 3.68 3.84 0.77 1.02 2.28 0.91 0.70 1.02 640.70

National Steel & 129.96 1.28 0.62 1.40 0.96 3.00 43.97 11.08 11.31 1.22 6.78 10.09 1.27 2.93 2.42 222.12

Agro Inds. Ltd.

Rashtriya Ispat 96.82 0.57 3.61 4.76 0.08 83.72 48.26 52.16 67.90 19.42 24.07 24.90 23.02 19.23 0.96 8211.08

Nigam Ltd.

Shree Precoated 64.01 1.20 0.46 1.26 2.03 4.06 3.37 13.76 14.72 5.52 15.02 37.15 6.07 7.81 1.42 236.55

Steels Ltd.

Steel Authority 84.43 0.30 0.91 1.47 0.32 20.10 64.95 13.50 16.36 15.60 35.88 53.50 18.32 19.41 1.21 13407.00

of India Ltd.

Tata Steel Ltd. 95.49 0.53 0.49 0.93 0.46 27.66 64.65 21.46 28.14 20.46 31.87 44.81 23.42 19.15 0.95 10254.70

Uttam Galva 63.08 2.68 0.55 1.55 2.04 2.08 -37.13 23.81 25.08 3.96 11.21 30.57 4.17 5.80 1.45 385.45

Steels Ltd.

(Contd.)


Cost Effectiveness Sales and Marketing Strategy Stock Market Performance

Firms Raw Indirect Other Financial Prior Period Market Share Expendi- Expendi- Expendi- Earnings Per P/E Ratio Yield

Materials, Taxes, Rents Miscella- Charges & Extra- ture on ture on ture on Share

Stores etc. etc. neous Expen- ordinary Adverti- Marketing Distri-

diture Expenses sing bution

Percent Percent Percent Percent Percent Percent Percent Percent Percent Rs. Times Percent

(1) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28) (29)

Bhushan Power & 77.52 11.38 4.23 25.96 0.06 1.94 0.02 0.49 3.05 24.00 0.00 0.00

Steel Ltd.

Bhushan Steel Ltd. 78.82 9.46 3.28 19.00 0.00 2.70 0.00 2.38 0.00 81.14 9.85 0.31

Essar Steel Ltd. 65.52 11.51 5.57 14.58 0.24 5.79 0.00 2.02 1.39 5.48 9.46 0.00

Ispat Industries Ltd. 63.00 12.56 3.93 20.22 0.26 5.42 0.10 0.74 1.79 0.56 62.62 0.00

J S W Steel Ltd. 61.00 10.80 7.59 12.71 0.02 6.00 0.00 0.40 5.06 98.72 8.91 0.00

Jindal Stainless Ltd. 74.99 8.10 5.21 7.42 0.45 3.39 0.04 1.45 1.85 15.79 9.61 0.26

Lloyds Steel Inds. 75.39 10.36 6.07 8.58 0.00 1.23 0.00 0.53 4.20 -3.48 -4.22 0.00

Ltd.

Mukand Ltd. 58.75 13.50 16.47 9.76 0.27 1.35 0.01 0.66 3.04 3.85 23.48 1.11

National Steel & 88.30 4.30 4.62 2.14 0.06 1.23 0.01 0.26 4.00 7.73 3.59 0.00

Agro Inds. Ltd.

Rashtriya Ispat 63.12 16.51 5.64 5.19 1.05 5.89 0.22 0.15 3.47 2.70 0.00 0.00

Nigam Ltd.

Shree Precoated 71.55 10.68 7.18 7.91 0.02 1.16 0.00 0.51 4.07 14.59 13.75 0.55

Steels Ltd.

Steel Authority of 61.02 22.69 5.16 7.43 0.07 25.27 0.00 0.21 2.20 17.09 10.37 1.92

India Ltd.

Tata Steel Ltd. 44.93 19.43 6.21 8.12 0.09 12.71 0.00 0.33 5.63 66.62 12.06 1.93

Uttam Galva Steels 83.39 4.51 4.84 6.74 0.00 1.72 0.00 0.24 3.88 10.44 3.73 0.00

Ltd.

(Contd.)


Technology and Environmental Indicators Human Resource Development and Social Indicators

Firms Import of Forex R & D Royalty Number of Power and Employment Salaries & Provident Staff Welfare Staff Other

Capital Spending Expenditure Knowhow Production Fuel Wages Fund Contri- Training Expenses on

Goods (cif) Royalty/ Expenses Plants Expenses bution Employees

Technical

Knowhow

Rs.Cr. Rs.Cr. Rs.Cr. Percent No. Percent No. Rs. Rs. Rs. Rs. Rs.

(1) (30) (31) (32) (33) (34) (35) (36) (37) (38) (39) (40) (41)

Bhushan Power & 773.66 0.000 0.000 0.0000 5.00 4.72 1000 59.03 1.29 4.34 0.00 2.52

Steel Ltd.

Bhushan Steel Ltd. 74.96 0.060 0.000 0.0000 3.00 3.44 2000 48.24 1.44 1.32 0.00 0.00

Essar Steel Ltd. 258.30 0.000 0.000 0.0000 1.00 25.81 3000 121.39 11.51 16.88 0.00 0.00

Ispat Industries Ltd. 12.94 9.960 0.000 0.0000 2.00 13.66 3000 131.44 10.64 23.26 0.00 0.00

J S W Steel Ltd. 384.33 0.000 3.720 0.0000 3.00 4.24 4000 154.36 8.52 12.59 0.00 0.00

Jindal Stainless Ltd. 135.80 0.000 1.040 0.0000 3.00 8.08 2800 66.67 3.94 2.91 0.00 0.00

Lloyds Steel Inds. 0.00 0.000 0.480 0.0000 3.00 15.34 1000 32.46 1.63 0.67 0.00 0.00

Ltd.

Mukand Ltd. 10.49 0.040 0.670 0.0000 2.00 5.87 1000 59.12 0.00 7.45 0.00 5.49

National Steel & 0.25 0.000 0.000 0.0000 1.00 2.29 1500 12.15 0.39 0.62 0.00 0.01

Agro Inds. Ltd.

Rashtriya Ispat 0.00 0.260 11.680 0.0036 1.00 2.82 16000 532.34 41.23 107.83 0.00 0.00

Nigam Ltd.

Shree Precoated 19.39 0.000 0.000 0.0000 1.00 3.41 1500 16.66 0.69 0.74 0.00 0.00

Steels Ltd.

Steel Authority of 111.70 42.210 76.850 0.1293 5.00 6.62 132000 4109.13 325.61 261.56 10.49 33.13

India Ltd.

Tata Steel Ltd. 295.05 123.550 33.250 0.8869 9.00 5.18 37000 1236.32 218.51 0.00 0.00 0.00

Uttam Galva Steels 40.84 0.000 0.000 0.0000 1.00 3.23 1000 23.95 1.48 2.99 0.00 0.00

Ltd.

(Contd.)

Appendix Table 5. (Concld.)

Foreign Trade Measure Growth Performance and Potential

Firms Net FOREX Export as % of Sales PAT (CAGR for Investment Total Assets Net Worth Repairs and Insurance

Earned Sales (CAGR for 3 3 Years) (CAGR for 3 (CAGR for 3 (CAGR for 3 Maintenance Premium

Years) Years) Years) Years) Expenses

Rs. Percent Percent Percent Percent Percent Percent Percent Percent

(1) (42) (43) (44) (45) (46) (47) (48) (49) (50)

Bhushan Power & Steel Ltd. -919.58 20.82 26.15 41.40 43.54 77.20 59.91 0.867 0.022

Bhushan Steel Ltd. 361.61 36.33 34.03 51.38 3.15 40.9 27.3 0.157 0.055

Essar Steel Ltd. 1549.25 32.38 30.79 30.99 -17.53 25.23 56.5 1.106 0.129

Ispat Industries Ltd. -470.64 17.26 26.37 37.5 -11.33 13.61 8.82 1.507 0.231

J S W Steel Ltd. -95.81 35.52 37.52 34.7 -3.47 22.48 70.47 1.183 0.141

Jindal Stainless Ltd. 112.5 42.94 27.16 29.04 82.13 43.34 36.09 0.262 0.098

Lloyds Steel Inds. Ltd. 4.58 14.43 30.91 -13.06 -37.13 -2.96 -1.22 0.289 0.145

Mukand Ltd. -316.15 6.66 21.52 270.76 -3.89 6.66 76.49 0.501 0.096

National Steel & Agro Inds. 78.52 32.85 24.52 25.46 51.83 14.85 8.9 0.082 0.022

Ltd.

Rashtriya Ispat Nigam Ltd. -1703.4 4.64 13.55 -4.13 36.36 27.8 25.21 1.2 0.03

Shree Precoated Steels Ltd. 508.56 58.13 51.06 86.25 181.4 67.31 82.7 0.299 0.25

Steel Authority of India Ltd. -6267.5 2.98 17.27 35.16 -7.02 23.51 24.15 6.108 0.021

Tata Steel Ltd. -663.84 9.9 18.38 34.22 40.5 32.07 46.64 3.168 0.147

Uttam Galva Steels Ltd. 247.33 51.44 29.89 71.25 120.54 39.58 53.03 0.263 0.095

figure 16. performance in competitiveness indicatorsispepune.org.in/jispe308pdf/burang4.pdf ·...

Documents